Introduction

Happy new year and welcome to the January edition of the Political Law Playbook! We hope everyone had a restful holiday season, as the excitement of this year’s elections is already well underway (this edition goes to press hot on the heels of the Iowa Republican caucuses). In this edition of our newsletter, the Federal Election Commission gave future federal candidates a gift just before the holidays, approving a rule that will make it easier for federal candidates to pay themselves a salary. Also in this month’s publication, the House Committee on Ethics recently opened an investigation into a member of Congress from Florida who allegedly violated campaign finance laws. Outside of Washington, state and local lawmakers continue to wrestle with some of the most pressing issues facing election administration, including how to handle the use of artificial intelligence (“AI”) technology in political campaigns and how to better regulate political activity by entities with foreign ties. Each of these news items portend what will certainly be an eventful 2024 election cycle in the US and, likewise, the most active global election year on record with over 4 billion people expected to cast election ballots worldwide this year. Buckle up and join the Dentons Political Law Team for the ride!

Federal Elections and Campaign Finance

FEC Approves Rule Making it Easier for Candidates to Pay Themselves a Salary — Starting in March of this year, federal candidates will more easily be able to use campaign funds to pay themselves a salary, according to a new rule approved last month by the Federal Election Commission (“FEC”). The change, which the FEC approved 5-1, is aimed at helping ensure that Americans of modest means can afford to mount campaigns for Congress and the White House, its proponents say. Although the FEC has long allowed candidates to use campaign funds to pay themselves a salary, the agency had previously set strict limits on such compensation to avoid improper personal use of donor funds. Under the new rules, candidates will be able to use campaign funds to pay themselves up to 50 percent of the annual salary for members of the US House of Representatives, or the equivalent of the average annual income they earned during a five-year look-back period (whichever is lower).

Ex-Nebraska Congressman’s Conviction for Lying to Authorities Overturned — Last month, the U.S. Court of Appels for the Ninth Circuit overturned the conviction of former Nebraska Republican Congressman Jeff Fortenberry for lying to authorities investigating illegal contributions to his 2016 reelection campaign, saying his trial was held in the wrong place. The court held that Fortenberry should not have been tried in Los Angeles, where the Republican's campaign allegedly received $30,000 from Lebanese-Nigerian billionaire Gilbert Chagoury, simply because federal agents who later interviewed him about the relevant donations worked there. Prosecutors said Chagoury donated the $30,000 through “straw donors” who attended a campaign fundraiser for Fortenberry in Los Angeles. Federal law prohibits foreign nationals from contributing to campaigns for federal, state, and local offices. In light of the Court’s ruling, the original prosecuting U.S. Attorney’s Office has said that a retrial is a possibility.

Federal Lobbying and Ethics

House Ethics Investigating FL Congresswoman — The House Committee on Ethics recently announced that it is investigating Florida Democrat Rep. Sheila Cherfilus-McCormick over complaints that she may have violated campaign finance laws, failed to submit required disclosures, and carried out improper hiring practices. The campaign finance complaint is tied to Cherfilus-McCormick’s special election in 2022 and her reelection campaign that same year. The Ethics Committee voted unanimously to investigate the allegations after getting a referral from the Office of Congressional Ethics, an independent agency that investigates misconduct complaints against members of Congress.

Non-Federal Elections and Campaign Finance

Montana Increases Campaign Contribution Limits — Last month, the Montana Commissioner of Political Practices published increases to the state’s campaign contribution limits for the 2024-2025 election cycle. Individuals and PACs are now able to contribute: $1,120 per election to a candidate for governor and lieutenant governor; $790 per election to a candidate for statewide office; and $450 per election to a candidate for other public offices. The previous state donation limits were $1,000, $700, and $400, respectively. Campaign limits have also increased for donations to political party committees. The new limits are applicable as of December 9, 2023.

San Jose Bans City Election Contributions from Multinational Corporations — The San Jose City Council voted unanimously Dec. 12 to bar multinational corporations from spending money to influence city elections. The new city legislation will prohibit corporations from spending money in San Jose’s elections if they are “foreign-influenced”, defined as one percent or more ownership by a single foreign investor or five percent or more ownership by multiple foreign investors. The ordinance will prevent nearly every member of the S&P 500, including several Silicon Valley technology giants, from making political expenditures in city elections due to more than one percent levels of foreign ownership in their companies.

Florida Bill Cracks Down on AI in Campaign Ads — A new piece of legislation introduced in the Florida state legislature would—if passed—implement new restrictions on political advertisements and communications that utilize artificial intelligence or AI. The bill—titled SB 850—was filed by state Senator Nick DiCeglie (R-St. Petersburg) and would punish violators with a range of civil penalties. The language of the proposed legislation specifically targets political ads, electioneering communications, and “other miscellaneous advertisements of a political nature” that are created with AI and disseminated in conjunction with Florida elections.

Federal Court Grants Injunction Against New MN Law Barring Political Donations by Business with Foreign Investors — A federal judge recently granted an injunction against a new Minnesota state campaign finance law that was due to take effect this month and that aims to discourage election activities by corporations with small foreign ownership interests. The injunction request was filed by the Minnesota Chamber of Commerce, which is pursuing a lawsuit seeking to invalidate the legislation on constitutional grounds. In granting the Chambers’ request for injunctive relief, U.S. District Court Judge Eric Tostrud characterized the law as squelching speech and likely counter to the First Amendment. The law as currently written applies to companies with foreign ownership thresholds that meet or exceed state limits, which are one percent for a single foreign investor or five percent for all foreign national owners in the aggregate.

Non-Federal Lobbying and Ethics

Chicago Board of Ethics Finds Four Lobbyists Improperly Donated to Mayor — In a report issued by the Chicago Board of Ethics last month, four prominent city lobbyists were found to have violated municipal ethics rules by donating improperly to Mayor Brandon Johnson’s political fund. Following an investigation of the political-giving activities of the relevant lobbyists, the Board issued probable cause findings indicating that the registered lobbyists appeared to have violated a mayoral executive order barring such donations. The violations do not carry a penalty for the mayor, but could potentially lead to the revocation of lobbying privileges for the four government affairs professionals. In 2011, former Mayor Rahm Emanuel signed an executive order into effect barring donations from city contractors and lobbyists. This order will remain in effect until such time as a future mayor chooses to rescind or replace it.

Los Angeles Mayor Announces Stricter Ethics Rules for L.A. City Staff — Los Angeles Mayor Karen Bass released a memo last month outlining policy and processes to guide her staff and help identify and avoid conflicts of interest when engaging in personal pursuits outside of city duties, called “outside activities”, under applicable law. According to the mayor's office, outside activities are any non-mayor's office employment, outside income, honoraria, or volunteer work. Mayor’s staff must obtain written approval, using the proper form, before participating in an outside activity—and the policy will apply even if the staff member is not receiving monetary compensation. If a staff member engages in outside activity, they may be precluded from participating in any city matter involving the outside employer, the provider of the honorarium or the organization for which they volunteer. According to Mayor Bass, her policy goes “beyond city law.”

International Political Law

2024 is the Biggest Election Year in History — More than 50 countries around the world with a combined population of around 4.2 billion will hold national and regional elections in 2024, in what is set to be the biggest election year on record featuring seven of the ten most populous nations in the world. In February, Indonesia is set to choose a new president to rule the nation of 277 million people, making it one of the world’s biggest votes held on a single day. Pakistan will also hold parliamentary elections in February. India—the world’s biggest democracy—will hold parliamentary elections in April and May. The European Union, representing more than half-a-billion people, is likewise set to hold parliamentary elections in June.

Practice Pointers

As our readership is well aware, federal, state, and local elections are heavily regulated endeavors. As such, election years bring with them unique challenges for individuals, businesses, nonprofits, and other entities that are seeking to impact and influence electoral outcomes. This month’s edition of Practice Pointers can’t begin to cover all of the unique challenges associated with stakeholder engagement in a presidential election year; so, in 2024, we will seek to address a different compliance burden each month.

The month of January ushers in the season’s year-end campaign finance filings at the federal and state levels, which provide PACs and other politically active organizations with one last window of opportunity to test their reporting systems before the year kicks into full gear. Federal year-end reports for 2024 generally cover financial activity undertaken in second half of 2023, and typically constitute the last “bulk” reports before a more frequent cadence of filings begins. The federal cadence changes to a quarterly schedule for most filers beginning in even-numbered calendar years, and layers on both pre- and post-general election reports, as well as potential specially timed pre-primary and special election reports. Each state will have its own election year filing schedule for political actors, with some jurisdictions having monthly reporting deadlines and others having a cadence that is more closely tailored to the federal level. The Dentons Political Law Team has extensive experience aiding clients of all shapes and sizes with the navigations of the wide-ranging campaign finance reporting deadlines occurring during election years. As such, please do not hesitate to reach out with any questions.

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